House Scraps Vote on Boehner’s Tax Plan Lacking Support

House Speaker John Boehner takes a question during a news conference in Washington. Boehner and Jay Carney, the White House spokesman, both left open the possibility that high-level budget talks could resume and that a broader agreement is possible. Photographer: Andrew Harrer/Bloomberg

“The House did not take up the tax measure today because
it did not have sufficient support from our members to pass,”
Boehner, an Ohio Republican, said in a statement. He called on
President Barack Obama and Senate Majority Leader Harry Reid to
come up with legislation to avoid more than $600 billion of tax
increases and spending cuts scheduled to start in January.

Standard & Poor’s 500 Index futures dropped 1.5 percent
amid mounting concern that Congress will be unable to resolve
the budget standoff with just 11 days left before the deadline.

The failure is a setback to Boehner, casting doubt on his
ability to muster votes from Republicans to pass any compromise
that would win support from Obama and in the Democratic-led
Senate. Anti-tax advocates within his party didn’t want to
support a bill that would let some taxes go up, and now Boehner
may have to rely on Democratic votes.

“The president’s main priority is to ensure that taxes
don’t go up on 98 percent of Americans and 97 percent of small
businesses in just a few short days,” White House spokesman Jay
Carney said in an e-mailed statement. “We are hopeful that we
will be able to find a bipartisan solution quickly.”

‘When Needed’

Boehner said he will call Obama, said Representative Steven
LaTourette of Ohio. A House leadership announcement said the
chamber will hold no more votes until after the Christmas
holiday and will return “when needed.”

“The odds go up that we go over the fiscal cliff,” said
Representative Rob Bishop of Utah, a Republican.

The failure of what Boehner called Plan B made it less
clear what budget legislation the House or Congress could pass.
The White House had said it would veto the tax bill and Reid had
said it was dead on arrival in the Senate.

Many Republicans, including Mick Mulvaney of South Carolina
and Tim Huelskamp of Kansas, were wary of voting for a bill that
allowed tax rates to go up for anyone.

Boehner’s inability to pass his tax alternative is
“certainly a victory for conservative principles,” Huelskamp
said. Boehner removed the Kansas lawmaker from the House Budget
Committee after he opposed the speaker on prior spending and
budget issues.

Bigger Problems

Republicans spent the day trying to muster support for
their legislation, using votes on unrelated bills to bring
members to the floor and asking Republican senators to call
House members.

Just after 7 p.m. in Washington, instead of starting debate
on the bill, leaders began a recess. Boehner conferred with his
leadership then called a 7:45 p.m. meeting.

That meeting lasted fewer than 15 minutes as Boehner told
his colleagues he didn’t have enough votes to bring the bill to
the floor. Republicans have 241 members of the 435-member House.

Boehner started the meeting with a prayer for serenity and
then read to the conference his statement that a few moments
later was released to the press, according to a person who was
in the room and sought anonymity to discuss the private meeting.

“It was just too big a hill to climb,” said Texas
Republican Joe Barton said.

Controlling Members

Democrats saw the failed attempt as proof that Boehner
can’t control his own members.

Representative Chris Van Hollen, a Maryland Democrat, said
on Bloomberg Television tonight that Boehner should have a vote
on an Obama-backed proposal that would allow tax rates to go
rise for households earning $250,000 or more, even if it
undermines his support among Republican.

“That’s the risk he takes,” Van Hollen said. “I would
hope he would put the country before Republican caucus
politics.”

Fewer than two weeks remain to avert the so-called fiscal
cliff, set to start in January. The Congressional Budget Office
has said that a failure to avert those changes would probably
lead to a recession in the first half of 2013.

If Congress doesn’t act, tax rates for income at all levels
would rise next month, along with taxes on estates, capital
gains and dividends.

Spending Cut

Earlier, Republicans barely got enough votes to pass a
spending-cut measure they brought up in a bid to gain support
for Boehner’s bill among lawmakers wary of increasing tax rates
without also reducing federal program costs.

That bill passed 215-209 with one member voting present. It
would eliminate most of the automatic cuts scheduled for 2013
and replace them with $314.5 billion worth of other cuts to food
stamps, federal workers’ benefits and other programs.

Republicans have held a firm anti-tax stance for 22 years.

Boehner’s measure would permanently extend tax cuts for
almost everyone, and Republicans sold it to their members as the
best deal they could hope for with Obama in office. They had
scheduled the vote over the objections of anti-tax groups such
as the Club for Growth and the Heritage Foundation.

Under Boehner’s bill, on incomes above $1 million, the tax
rate on ordinary income would go to 39.6 percent from 35
percent, and the top rate on capital gains and dividends would
go to 23.8 percent from 15 percent, including a 3.8 percent tax
from the 2010 health care law that starts in January.

$400 Billion

Compared with continuing current policies, the bill would
probably raise between $300 billion and $400 billion, based on
official estimates of other proposals.

The bill would extend current estate tax policy, which has
a $5.12 million per-person exemption indexed for inflation and a
35 percent top rate. It would permanently prevent the expansion
of the alternative minimum tax.

Some lawmakers expressed uncertainty about the path ahead
even before Boehner’s decision. “Don’t make me lie to you,”
said Representative Charles Rangel, a New York Democrat first
elected to Congress in 1970. “I have no idea what the hell is
happening.”